Nifty slips under 23,000-mark, Sensex crashes 1000 points; Here's why

The Indian benchmark indices fell sharply in today's trading session, with the Sensex declining 989 points and the Nifty 50 slipping 1.39%, as renewed geopolitical uncertainty and a rebound in crude oil prices weighed on investor sentiment.

The NSE Nifty 50 declined 321.10 points, or 1.39%, to 22,819.40, against the previous close of 23,140.50. The index opened at 23,064.90, with 48 of its 50 constituents ending lower and two advancing. The 30-constituent index had fallen by 1020 points to touch an intraday low of 72,832.08, with all trading in the red.

The markets reacted to the rejection by US President Donald Trump of Iran’s proposal to resolve the conflict and reopen the Strait of Hormuz has revived concerns over prolonged disruptions to global energy supplies. WTI crude was trading around $93-$94 a barrel, while Brent crude had climbed above $105, keeping oil prices at the centre of investor concerns.

Higher crude oil prices could add to inflationary pressures, increase India’s import bill and weigh on corporate margins. Rising global bond yields and a stronger US dollar have also emerged as headwinds for emerging markets, potentially affecting foreign portfolio flows and risk appetite.

Elevated US Treasury yields and renewed inflation concerns have reinforced expectations that global monetary policy could remain restrictive for longer. Even Asian markets traded mixed in early trade, with Japan’s Nikkei 225 gaining around 0.5%, while South Korea’s KOSPI fell more than 1%. Gains in Japanese equities were offset by weakness in South Korean technology and semiconductor stocks.

Adani Enterprises and Adani Ports fell sharply, down by 2.67% and 2.57%, dragging the Nifty down. Even Sriram Finance and Bharat Electronics were down by 2% each. Auto stocks such as Mahindra and Mahindra, Tata Motors Passenger Vehicles (TMPV) declined in the range of 1% to 2.5%. Dr. Reddy's Laboratories was the only one to buck the trend, rising by 2% at the time of reporting.

All sectoral indices on the NSE traded in negative territory, with PSU banking, banking and realty stocks recording the steepest declines. The Nifty PSU Bank index fell 2.51%, followed by the Nifty Bank, which declined 1.80%. The Nifty Realty index dropped 1.75%. The Nifty Auto index fell 1.61%, while the Nifty Metal index declined 1.62%. The Nifty Financial Services index slipped 1.55%, and the Nifty FMCG index lost 1.26%.

What analysts says

Y Ponmudi, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm, said Indian equity markets are likely to remain cautious as renewed geopolitical uncertainty and a rebound in crude oil prices weigh on investor sentiment. He said the rejection of Iran’s proposal by Trump has revived concerns over prolonged supply disruptions, making oil prices the dominant factor for global markets.

Ponmudi added that rising global bond yields and a stronger US dollar remain important headwinds for emerging markets, while foreign institutional outflows and domestic institutional buying will continue to influence market direction.